Tax from renting when most of rent goes into paying off mortgage

lesterxburnham

Hi,
I started renting my flat from 1st September 2017. Am I understanding it correctly that I have to register for self assessment before 30th September 2018?

Another question is whether I need to register at all if I charge £530 for rent out of which £520 is going into paying off the mortgage on that property?

Is there anything else I need to do as far as HMRC is concerned? Do I need to pay any additional insurance contributions or other tax? I am in full time employment and I'm renting based on consent to let (i.e. my mortgage is not buy to let) if that makes any difference.

elverson

If you don't know this stuff you shouldn't be a landlord.

dancing_star

Let me Google that for you:
https://www.gov.uk/renting-out-a-property/paying-tax

JoJo1978

Yes you should register. Do it now so that you can start using the HMRC online help provided to understand your obligations well before you need to submit. There's lots you need to be aware of that I'm not sure you are.

ProDave

You are still "self employed" so need to register with hmrc and submit a tax return.

If your self employed business makes a loss, that may reduce the tax bill for any other income you have.

BoGoF

ProDave wrote: »

You are still "self employed" so need to register with hmrc and submit a tax return.

If your self employed business makes a loss, that may reduce the tax bill for any other income you have.

A little knowledge is a dangerous thing.

G_M

lesterxburnham wrote: »

Hi,
I started renting my flat from 1st September 2017. Am I understanding it correctly that I have to register for self assessment before 30th September 2018?
Yes of course. Why would you not?

Another question is whether I need to register at all if I charge £530 for rent out of which £520 is going into paying off the mortgage on that property?
Your total mortgage payment is not a taxable expense. Only the interest is.

Is there anything else I need to do as far as HMRC is concerned?
Learn what are taxable expenses.

Do I need to pay any additional insurance contributions or other tax?
No.

(hmmm.... CGT? CT? )
I am in full time employment and I'm renting based on consent to let (i.e. my mortgage is not buy to let) if that makes any difference.

That is an arrangement between you and your mortgage lender. Irrelevant to HMRC.

What did your business plan show when you prepared it before deciding to let your property?

lots of info here, including links to relevant websites for more info:


** Tenancies in Eng/Wales: Guides for landlords and tenants This thread is intended to provide information to both landlords and tenants relating to Assured Shorthold Tenancies (ASTs) in England and Wales.

Topics covered:

* Repairing Obligations: the law, common misconceptions, reporting/enforcing, retaliatory eviction & the new tenant protection (2015)

* Deposits: payment, protection and return

* Ending/renewing an AST: what happens when a fixed term ends? How can a LL or tenant end a tenancy? What is a periodic tenancy?

* Rent increases: when & how can rent be increased?

* Repossession: what if a LL's mortgage lender repossesses the property?

* New landlords: advice, information & links

* Letting agents: how should a landlord select or sack?

flashg67

Get registered with HMRC and sign up to their email alerts service - there's loads of online seminars, videos and guides to help you fill in your return, or pay an accountant to do it. I have two BTL with my OH and we do our own.
Log everything you spend in relation to the property as you can claim against any tax bill such as insurance, agent fees, maintenance. Morgage interest is the one thing that has changed - have a read of this - http://www.telegraph.co.uk/investing/buy-to-let/new-buy-to-let-tax-works-andhow-beat/

greendoor665

OP you need to read a lot more about the rules and obligations of landlords or you may be in for a nasty surprise.

ProDave wrote: »

You are still "self employed" so need to register with hmrc and submit a tax return.

If your self employed business makes a loss, that may reduce the tax bill for any other income you have.

Not quite - renting out a property is a separate class of income from self-employment. Renting out a property does not make you self employed. There are differences in how they are treated, for example the self-employed have to pay NI but you do not pay NI on property income in most circumstances.

Losses from property are also treated differently, in that they can only be carried forward and offset against profits from property in future tax years or against profits from other properties in the same tax year. You cannot reduce your tax payable from other sources of income.

Sarastro

Does this even stack up? By the time you've paid tax on the rent, aren't you going to be left with a loss each month?

lesterxburnham

ok, thanks for all the replies, I do appreciate your help. yes, I was reckless when setting the rent as I didn't consider tax implications. So, if I lose money in this tenancy period then be it but I want to learn from my mistakes and know how much to charge next tenants.


I will register for self assessment and I'd like to know how much roughly I should set aside for tax.

So, between September 2017 - March 2018 I will get £3710 from rent and I will pay £3640 mortgage on that property. My Questions is, will I pay tax off £3710 or £70 (£3710 - £3640)?

Replies above are conflicting about insurance contributions - do I need to pay insurance contributions or not?

Also, if that makes any difference, I live in Scotland and I'm in full time employment where I'm on 40% tax bracket. How does it affect my HMRC obligations?